Getting aggressive on damage

The Ford Escape that Karen Anderson recently returned to Budget Rent a Car in Bend, Ore., looked “squeaky clean” to her. But perhaps she did not look hard enough.

Less than a week after her trip, Ms. Anderson, a real-estate broker in Morgan Hill, Calif., was informed by Budget that it would be charging her an extra $20 for a chip that it had found in the S.U.V.’s windshield.

“I never saw the chip,” she said. “We even went through the trouble of washing the windshield before returning the car. Honestly, I was stunned.”

She says that Budget told her that if she did not pay the fee, the case would be forwarded to a company that specializes in collecting damage claims, and she says she was warned that if she did not settle quickly, an extra fee might be added for the three days the car would be out of service for repairs.

In the past, car rental companies were willing to overlook minor damage to their vehicles, particularly when evidence of the renter’s responsibility was flimsy. Not any more. The industry, slow to recover from the travel slump that began after 9/11, now appears bent on pursuing even the smallest cases.

“Car rental companies are getting much more aggressive about their claims,” said Jeff Miller, a travel lawyer with the firm of Lipshultz & Miller in Columbia, Md. Chasing down customers who scratch or dent cars, he said, “is a growth business.”

Independent business travelers like Ms. Anderson, who lack the liability insurance protection that corporations negotiate for employees, are most vulnerable to the new bill-collecting mentality. They have nowhere to turn except to their credit card companies or car insurers, which have become increasingly reluctant to cover all damages. As a result, they are often left holding the bill.

If they contest it, they may face further fees. After Ms. Anderson refused to pay the $20, for example, PurCo Fleet Services, one of the largest and most established damage-claims services for the car rental industry, told her that it was adding a $10 “administrative fee” to her bill and gave her 30 days to respond. It also enclosed a written report from a glass-repair shop.

That only got her dander up. “The writing was far too faint and utterly unintelligible,” she said.

Budget did not respond to numerous requests for a comment on the windshield claim. But David Purinton, PurCo’s founder and owner, agreed to review her file. He said Budget apparently did not conduct an inspection when she returned her vehicle (many smaller locations do not have enough workers to inspect each car when it is brought back). However, about half an hour after the S.U.V. was checked in, an employee discovered a chip, according to the case record.

Mr. Purinton said about 40 percent of the claims he received are not recoverable for one reason or another. Sometimes, the damage is not adequately documented. Other times, there is no conclusive proof that the renter was responsible. “This case may fall under that 40 percent,” he said. Either way, he added, Ms. Anderson’s case was too small to pursue. If she appealed the bill, he said, “we’ll close the case.”

Kevin Miles, the president of the American Car and Truck Rental Association, a trade group, says car rental companies have a good reason to take a hard line on claims. Not only do the damages eat away profits (Enterprise Rent-a-Car, the largest car rental company in the United States, says it loses about $60 million a year because of uncollectible damages) but increasingly, the insurance companies of customers are reluctant to pay for dents on vehicles.

“We’re not in the business of alienating customers,” he said, “but if your insurance company doesn’t pay, you have to.”

He acknowledges that some car rental companies inflate claims with tactics like charging for excessive “loss of use” or exaggerating the cost of repairs. Mr. Miles’s organization has no formal guidelines on how to handle claims against a renter, but he said such conduct was forbidden by his group’s code of ethics. “If we found out one of our members was violating our code of ethics by filing excessive claims, we would kick them out,” he said.

Mr. Purinton, the PurCo president, says such misbehavior is relatively common, although he stopped short of naming competitors who were parties to it. “They are shady characters,” he said. “And I’m mad as hell because what they are doing tarnishes me and my reputation.”

Business travelers are equally angry, but for different reasons. When Eugene Jivotovski, a software engineer in Fremont, Calif., received a bill from Linda A. King & Associates Claims Management regarding a recent rental, he thought the invoice for an additional $360.26 was a joke. He rented last November from Fox Rent A Car in San Diego. According to a letter sent to Mr. Jivotovski, the company had found cigarette burns on the driver’s side of the Chrysler Pacifica he used.

A letter accompanying the invoice suggested that if he did not pay, the company would take him to court.

Mr. Jivotovski said there were two problems: He does not smoke, and the license plate for the car on the bill did not match the one he had rented. “I have absolutely no problem paying money for the damage I incur,” he said. “But paying for something I haven’t done makes me furious. I feel like I’m being robbed.”

Bill Daly, a claims supervisor for Linda A. King, said he did not know why the license plate was not the same as the one on Mr. Jivotovski’s rental agreement, but insisted that the rest of the case “matched up.” Still, he said, one of his associates had phoned Mr. Jivotovski after he disputed the claim and “found him to be pretty sincere, so we closed the case and sent it back to the client.” Mr. Daly also said Fox Rent a Car would not pursue the matter.

Car rental experts say that most cases handled by claims-management companies turn out differently. Otherwise, they say, none of the companies would be able to stay in business. A majority of the corporate travelers who receive a demand from a claims-management company either submit a claim to their insurance, or more frequently, pay for the damage instead of risking a protracted dispute, they say.

Christy Conrad, a spokeswoman for Enterprise, one of the few car rental companies to manage its damage claims rather than farm them out, says the intent should not be to stick renters with a bill but rather “to make the situation right.”

“We don’t work to make money off the claims-management process,” she said. “We just want the vehicle back in service. That’s where we make the money.”

But that may not be a widely held view, according to Warren Lieberman, the president of Veritec Solutions, a revenue-management consultancy in Belmont, Calif. “Companies are looking at the bottom line, and this is just another opportunity to reduce revenue leakage,” he said. “But when you crack down on damage, it’s inevitable that sometimes, you’re going to assign blame to the wrong party.”
The Ford Escape that Karen Anderson recently returned to Budget Rent a Car in Bend, Ore., looked “squeaky clean” to her. But perhaps she did not look hard enough.

Less than a week after her trip, Ms. Anderson, a real-estate broker in Morgan Hill, Calif., was informed by Budget that it would be charging her an extra $20 for a chip that it had found in the S.U.V.’s windshield.

“I never saw the chip,” she said. “We even went through the trouble of washing the windshield before returning the car. Honestly, I was stunned.”

She says that Budget told her that if she did not pay the fee, the case would be forwarded to a company that specializes in collecting damage claims, and she says she was warned that if she did not settle quickly, an extra fee might be added for the three days the car would be out of service for repairs.

In the past, car rental companies were willing to overlook minor damage to their vehicles, particularly when evidence of the renter’s responsibility was flimsy. Not any more. The industry, slow to recover from the travel slump that began after 9/11, now appears bent on pursuing even the smallest cases.

“Car rental companies are getting much more aggressive about their claims,” said Jeff Miller, a travel lawyer with the firm of Lipshultz & Miller in Columbia, Md. Chasing down customers who scratch or dent cars, he said, “is a growth business.”

Independent business travelers like Ms. Anderson, who lack the liability insurance protection that corporations negotiate for employees, are most vulnerable to the new bill-collecting mentality. They have nowhere to turn except to their credit card companies or car insurers, which have become increasingly reluctant to cover all damages. As a result, they are often left holding the bill.

If they contest it, they may face further fees. After Ms. Anderson refused to pay the $20, for example, PurCo Fleet Services, one of the largest and most established damage-claims services for the car rental industry, told her that it was adding a $10 “administrative fee” to her bill and gave her 30 days to respond. It also enclosed a written report from a glass-repair shop.

That only got her dander up. “The writing was far too faint and utterly unintelligible,” she said.

Budget did not respond to numerous requests for a comment on the windshield claim. But David Purinton, PurCo’s founder and owner, agreed to review her file. He said Budget apparently did not conduct an inspection when she returned her vehicle (many smaller locations do not have enough workers to inspect each car when it is brought back). However, about half an hour after the S.U.V. was checked in, an employee discovered a chip, according to the case record.

Mr. Purinton said about 40 percent of the claims he received are not recoverable for one reason or another. Sometimes, the damage is not adequately documented. Other times, there is no conclusive proof that the renter was responsible. “This case may fall under that 40 percent,” he said. Either way, he added, Ms. Anderson’s case was too small to pursue. If she appealed the bill, he said, “we’ll close the case.”

Kevin Miles, the president of the American Car and Truck Rental Association, a trade group, says car rental companies have a good reason to take a hard line on claims. Not only do the damages eat away profits (Enterprise Rent-a-Car, the largest car rental company in the United States, says it loses about $60 million a year because of uncollectible damages) but increasingly, the insurance companies of customers are reluctant to pay for dents on vehicles.

“We’re not in the business of alienating customers,” he said, “but if your insurance company doesn’t pay, you have to.”

He acknowledges that some car rental companies inflate claims with tactics like charging for excessive “loss of use” or exaggerating the cost of repairs. Mr. Miles’s organization has no formal guidelines on how to handle claims against a renter, but he said such conduct was forbidden by his group’s code of ethics. “If we found out one of our members was violating our code of ethics by filing excessive claims, we would kick them out,” he said.

Mr. Purinton, the PurCo president, says such misbehavior is relatively common, although he stopped short of naming competitors who were parties to it. “They are shady characters,” he said. “And I’m mad as hell because what they are doing tarnishes me and my reputation.”

Business travelers are equally angry, but for different reasons. When Eugene Jivotovski, a software engineer in Fremont, Calif., received a bill from Linda A. King & Associates Claims Management regarding a recent rental, he thought the invoice for an additional $360.26 was a joke. He rented last November from Fox Rent A Car in San Diego. According to a letter sent to Mr. Jivotovski, the company had found cigarette burns on the driver’s side of the Chrysler Pacifica he used.

A letter accompanying the invoice suggested that if he did not pay, the company would take him to court.

Mr. Jivotovski said there were two problems: He does not smoke, and the license plate for the car on the bill did not match the one he had rented. “I have absolutely no problem paying money for the damage I incur,” he said. “But paying for something I haven’t done makes me furious. I feel like I’m being robbed.”

Bill Daly, a claims supervisor for Linda A. King, said he did not know why the license plate was not the same as the one on Mr. Jivotovski’s rental agreement, but insisted that the rest of the case “matched up.” Still, he said, one of his associates had phoned Mr. Jivotovski after he disputed the claim and “found him to be pretty sincere, so we closed the case and sent it back to the client.” Mr. Daly also said Fox Rent a Car would not pursue the matter.

Car rental experts say that most cases handled by claims-management companies turn out differently. Otherwise, they say, none of the companies would be able to stay in business. A majority of the corporate travelers who receive a demand from a claims-management company either submit a claim to their insurance, or more frequently, pay for the damage instead of risking a protracted dispute, they say.

Christy Conrad, a spokeswoman for Enterprise, one of the few car rental companies to manage its damage claims rather than farm them out, says the intent should not be to stick renters with a bill but rather “to make the situation right.”

“We don’t work to make money off the claims-management process,” she said. “We just want the vehicle back in service. That’s where we make the money.”

But that may not be a widely held view, according to Warren Lieberman, the president of Veritec Solutions, a revenue-management consultancy in Belmont, Calif. “Companies are looking at the bottom line, and this is just another opportunity to reduce revenue leakage,” he said. “But when you crack down on damage, it’s inevitable that sometimes, you’re going to assign blame to the wrong party.”

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